Congress may act in time to provide emergency funding, but some damage may already be done.

The Trump administration is threatening to force federal employees to work without pay if Congress fails to act quickly in providing an emergency funding boost for operations on the southern border, saying the office in charge of housing migrant children is on the verge of running out of funds.

The Health and Human Services Department’s Office of Refugee Resettlement will soon run out of funding for its unaccompanied children program, the agency has warned, forcing it to operate as if a government shutdown were in place. The administration has also cautioned that it could cut off funding for contract shelters where the children are held.

Minors who cross the U.S.-Mexico border alone, or those who cross without a biological parent and are subsequently separated and reclassified as unaccompanied, are placed into ORR shelters operated by private contractors until a suitable relative or foster home is located. Normally, unaccompanied children detained after crossing into the country are housed briefly at Customs and Border Protection facilities before being transferred into HHS custody. Recently, however, a combination of policy changes and a surge of unaccompanied children coming across the border has put ORR shelters at capacity, compelling the administration to keep children in CBP shelters longer than usual. This has strained CBP resources and led to reports of unsuitable and inhumane conditions for young children.

The administration in May requested a $4.6 billion supplemental funding package to relieve pressures at both HHS and the Homeland Security Department. As Congress debates multiple bills with varying restrictions on how the Trump administration can spend the money, HHS has issued dire warning about the consequences of inaction. The department has indicated that ORR would run out of money in July, but a spokesperson would not elaborate on a more specific date.

“Our valued federal employees in ORR who care for children and place them with sponsors would be required to work without pay,” HHS Secretary Alex Azar wrote in a joint letter to Congress earlier this month with acting DHS Secretary Kevin McAleenan.

Azar reiterated that threat to Fox News earlier this week, adding HHS contractors would soon be receiving only “IOUs.”

“It basically functions like a government shutdown,” Azar said. “That’s the problem.”

HHS said that it would use the “safety of human life” carveout to the Justice Department’s interpretation of the Antideficiency Act to continue to operate shelters even once funding runs dry. The department can only provide those services necessary for protecting life, however, leading to its recent controversial decision to scrap services for children such as recreation, education and legal aid (HHS is reinstating those services at some shelters due to state requirements).

With ORR on the verge of pausing federal reimbursement for its grantees, the agency has warned that some shelters may not be able to continue caring for children. Many of the organizations are nonprofits. ORR said a funding lapse could disincentivize future participation in the program.

Neil Nowlin, a spokesman for Southwest Key Programs, a nonprofit that operates the largest number of shelters, could not answer what would happen if its HHS funding stream is cut off.

“It’s a good question and one that I hope we don’t have to face,” Nowlin said.

BCFS, a network of nonprofit organizations, including some that operate ORR shelters, was similarly unclear on its plans if it loses funding.

“We will determine next steps at the appropriate time,” a spokeswoman said.

Contractors have already felt the pinch elsewhere in ORR, as the agency last month said it would reallocate up to $167 million from Refugee Support Services, Victims and Trafficking and Survivors of Torture toward the unaccompanied children program. It informed grant recipients from those other offices that it was withholding third-quarter funding.

As of June 10, HHS received 52,000 unaccompanied children referrals from DHS in fiscal 2019, putting ORR on pace for its highest ever annual total. The agency currently has about 13,500 immigrant children in its custody.

Bob Carey, who headed ORR during the Obama administration, said the administration, in part, has itself to blame for the spike in unaccompanied children needing shelter. He highlighted an information sharing agreement between DHS and HHS that enabled Immigration and Customs Enforcement to review the legal status of potential sponsors. During his tenure, Carey said, ORR kept that information separate from enforcement agencies so as to avoid creating a disincentive for family members to come forward to sponsor the children.

“It created a chilling effect on immigrant families,” Carey said.

The policy appeared to have dramatic effects, with the average length of stay in HHS custody for minors jumping from 33 days during Carey’s tenure to 90 days in November 2018, according to the department. That has since dropped to 44 days as of last month.

An unexpected uptick in ORR’s responsibility drains the agency’s resources exponentially, as the temporary shelters—or “tent cities”—are much more expensive to operate than its long-term facilities. It also provides worse standards of living for the children, which Carey said can in turn cause them to act out and demoralize staff.

“I was uniformly impressed when I was there by the professionalism of staff at ORR, the federal employees,” Carey said. “It’s a very mission-driven office.” He added that most of the staff come from a social worker and child welfare background and feel deeply passionate about the work they do.

The Senate on Wednesday easily passed its version of a supplemental spending bill, which would provide $2.88 billion to HHS to shelter children in its custody. Lawmakers said the measure would ensure “safe and appropriate” care for children and resume the full range of services ORR typically provides. It contains certain policy provisions, such as boosting inspector general oversight of the shelters and guaranteeing members of Congress access to the facilities.

The House version of the bill would also provide HHS with $2.9 billion, but would add more policy riders to restrict how the money from the overall bill is spent. The department would only be able to keep children in temporary “influx” shelters for 90 days and could not contract with any shelter that does not provide basic services such as toothbrushes and schooling.

The House on Thursday morning appeared poised to once again send its version of the supplemental spending package to the Senate, despite the overwhelming bipartisan support in the upper chamber for its own package, but Democratic leadership suddenly pulled the measure. That could indicate the House is prepared to pass the Senate legislation, thereby ending the impasse.

To Azar, the solution never should have taken this long.

“This isn’t about politics,” he said earlier this week. “This is just about getting money so we can house these kids.”

Carey agreed, saying caring for children use to remain above the political fray. He cautioned, however, some of the damage could already be done. As ORR prepared to provide only essential services when operating as if a shutdown were in place, Carey said oversight aimed at protecting minors in HHS custody was likely reduced. Additionally, he said, the mere threat of working without pay—even if it does not come to fruition—can have a major impact on the morale of the agency’s workforce.

Editor's note: Late Thursday the House passed the Senate's border emergency funding bill, sending the measure to President Trump for his signature.